U.S. housing prices saw their biggest jump in nearly two years in February, federal housing officials said Tuesday, reflecting the continuing effects of insufficient housing supply. have in the national real estate market.
Prices rose 1.2% in February compared to January, the largest monthly increase since April 2022, the Federal Housing Finance Agency said in its monthly house price report. Year-over-year, prices rose 7%, the fastest increase since November 2022.
“U.S. housing prices rebounded with an increase in February, after declining slightly in January,” said Anju Vajja, deputy director of FHFA’s Division of Research and Statistics. “All nine census divisions experienced price appreciation over the past 12 months, with the New England and Mid-Atlantic divisions showing double-digit growth.”
While housing supply in the market has slowly improved in recent months, it remains well below historical norms as many homeowners took out mortgages at low interest rates before the Reserve federal government began its cycle of rate increases more than two years ago. Moving or upgrading to a larger home would involve new financing at rates for a 30-year fixed-rate mortgage above 7 percent, a dynamic that incentivizes many homeowners to stay where they are.
Additionally, housing construction has been slow to fill this void. Together, these dynamics slow the flow of properties into the market, exacerbating the national housing shortage and housing affordability problem.
February’s price surge is unlikely to be good news for the Fed, which has found that the rapid progress it made in taming inflation last year has stalled so far in 2024. Prices of real estate are not directly reflected in the inflation measures tracked by the US central bank, but the changes contribute in part to the measures of imputed rents that are included in inflation indices and which have stubbornly remained high. (Reporting by Dan Burns; Writing by Paul Simao)
